Business Outsourcing in Travel and Tourism: Challenges and Opportunities

The travel and tourism industry has grown exponentially in recent years with rise in disposable incomes, improved connectivity, smartphone penetration, and arrival of tech-savvy millennials. As the industry evolves and competes more aggressively, new business models have emerged in this fast-paced business.

For the business process management (BPM) sector, travel and tourism presents new opportunities. Online travel companies and new businesses that are emerging, based on the sharing economy and digital business models, offer new revenue streams in this market. What’s more exciting is firms are adopting multiple channels for communicating with customers. They are exploring different, disruptive avenues to deliver service to customers in their preferred channels of communication.

CURRENT KEY TRENDS IN THE INDUSTRY

Online channels driving growth: Internet, social, and mobile has not only shifted a chunk of sales to online channels, but also added to overall sales volumes. Online travel agencies are among the leading travel intermediaries today. Traditional players are also investing heavily in these digital channels and interacting directly with their customers through them. Flexibility, reach, cost, customer preferences and, more importantly data that these channels generate — enabling better understanding of customers and influencing loyalty — are the major drivers of this behavior.

Technology empowering customers: Your growth and profitability is today literally in customers’ hands. With a smartphone or a handheld device, the entire travel lifecycle can be researched, planned, compared, confirmed, and tracked by the customer alone without assistance of any agent.

Demand for personalized experience: Travellers do not need services; they seek experiences. Businesses that focus on customer on-demand needs, personalization, and authenticity will gain loyalty, positive reviews, social likes, and word-of-mouth recommendations. Customers want to be understood and serviced as individuals having unique needs, especially on each of their trips be they business or leisure.

Power of digital devices: Mobile devices have a strong impact on travel bookings and consumer behavior, but their full impact is still emerging. Hotels and airlines have only introduced basic digital functionality. IoT, Cloud, and artificial intelligence (AI) will soon push the mobile channel to the next level.

CHALLENGES FACING THE TRAVEL INDUSTRY

The fortunes of the travel industry and BPM companies servicing them are so closely intertwined as to make them inseparable. Growth in the number of travellers, resulting in a surge in travel services through BPM companies, has resulted in significant changes in the business, and created its own challenges.

Omni-channel: Today’s travellers use different channels for a single transaction. Providers experience issues like legacy systems, inherent limitations of applications to interact with others, lack of understanding, and the evolving nature of new communication channels. They should provide information, and seamless sales and services to customers across all channels to circumvent this problem.

New business models: Another disruptive trend that can take a slice of the pie from traditional travel companies is alternative transportation and lodging options. This is due to the peer-to-peer (P2P) economy, which is based on collaborative consumption involving sharing of resources through exchange, for example in car rentals, transportation, and housing.

Mobile channel: Most travel companies are yet to learn the potential of the mobile channel, and new ways of customer engagement. Mobile plays a great role in enhancing buyer experience. Mobile apps offer customer service, help and advice, as well as weather, dining, and other tips during travel.

MEETING NEW-AGE CUSTOMER ASPIRATIONS, THE BPM WAY

Advanced technology and information access have changed travellers’ expectations. Since each trip is made up of multiple products, services, and buying transactions, BPM companies know that customer experience in one area raises expectations from the next. Orienting products and services around these expectations is a challenge that travel and BPM companies should prepare for.

Transform Your Channel Ecosystem
Outsourcing service providers can differentiate themselves by managing the interplay of channels that customers use. By seamlessly integrating these channels in a single omni-channel view, they transform customer experience, resulting in customer retention, higher profits, and enhanced customer lifetime value. You can track the customer and your interactions across different channels in one integrated view of the customer.

Voice: The largest and best channel for complex transactions and technophobic people, voice provides quick resolution on multi-leg journeys, vacation planning, and reservation changes. In addition, IVR technology has increased self-serve and reduced service costs. Voice remains the best medium to enable upsell and cross-sell.

Web: Customers increasingly prefer self-service channels on the Web. They seek easy access to information, end-to-end options, and quick and easy transactions. Web analytics helps you personalize and pre-empt customers’ needs. The Web’s drawback is lack of personal touch and control over abandon rates (e.g., while booking a trip), but it can make up by integrating it with AI and personalization.

Chat: Chat lowers costs and helps drive sales conversions on websites. Integrating chat into a mobile app enhances customer engagement. It eliminates the need to wade through complex IVR systems and enables fast resolution of quick queries. Chatbots are emerging as intelligent interfaces that customers interact with to resolve queries, which are complemented by human interface for more sophisticated support.

Video chat: Video chat provides the best human touch while leveraging technology. Declining bandwidth costs and improved streaming video technologies have increased its adoption. It is largely used in airport kiosks, remote or hotel locations, and for integration with website or mobile apps. Though it requires skilled agents and cost remains a barrier, this channel is increasingly adopted to drive higher level of customer experience.

Email: This channel is good for travel updates, exchanging documents, or addressing non-urgent queries. It’s best for managing customer expectations on turnaround times and keeping customers informed. But email query resolutions are slower than other channels and therefore declining in importance and being replaced by a messaging interface. However, this digital channel still lends itself to outbound sales and customer acquisition.

Social: Customers are using social more than ever. They write reviews or tweet about their vacations, see and read other customers’ experiences, and influence potential customers. Managing your reputation and keeping an eye on social media is imperative for travel and B2C companies. Leveraging this channel for its ability to influence brand recognition and drive sales and conversions is an emerging trend among most companies. However, they need to invest a lot to improve ROI from social channels.

Mobile: Mobile sites and apps helps identify customers, track their likes and dislikes, and provide customized offers. Coupled with features that incorporate location-based services, mobile payments, and individual preferences, mobile helps to enhance customer service, brand connection, loyalty, and revenue. Mobile is the fastest-growing channel relevant to travel companies. Companies must invest in enhancing this channel and leverage its increasing capabilities and power.

Use Big Data Analytics
All digital channels provide abundant data. Using Big Data and analytics, coupled with demographic and historical data, you can improve customer insights, product and service development, market segmentation and targeting, and competitor and business insights. Using the right tools for integrating, analyzing, and deriving actionable insights from this data enhances the value of all digital channels.

Companies should leverage these insights further for each transaction and apply predictive analytics to pre-empt customer preferences and deliver relevant offers and products/services to them. This is the ultimate level of personalization to not only improve revenue conversion, but also enhance customer experience as well as provide repeat customers.

Leverage Emerging Technologies
Technological innovation constantly disrupts the BPM industry, more so with the competitive environment in the travel industry changing consumer travel behavior and forcing changes to their business models. After the rise of the online and mobile channels, we predict it’s now the turn of analytics-driven automation and AI to impact consumers.

Artificial Intelligence: Travellers increasingly interact with “artificial” agents like chatbots and virtual assistants. Consumers are communicating more with virtual travel agents than an actual person.

Internet of Things (IoT): We are on the cusp of an explosion in IoT adoption due to proliferation of connected devices. It enables many new technological capabilities that will enhance a traveler’s experience, collect more real-time data, and help reduce costs.

Technology players: The growing role of technology means an important role for technology players, with companies like Google, TripAdvisor, etc., challenging travel intermediaries by allowing travellers to complete bookings on their sites and following them during their trips, and across devices and channels to make better offers at the right time.

INDUSTRY ROAD MAP FOR THE FUTURE
The travel and tourism industry is facing challenges from low profits, competition, increasing operational costs, etc. For BPM companies partnering with a travel company, success depends on how the BPM provider manages two factors: delivery innovation and the client’s market success. A differentiated BPM offering requires current expertise in the travel and tourism space, and the ability to deliver advanced technology-enabled automation and analytics. For example, personalizing service within the context of a traveler’s current situation, instead of using transaction history, helps drive higher conversion rates, better customer experience, and stronger customer loyalty.

Here, real-time analytics and omni-channel capabilities deliver superior customer experience, along with better conversion rates. Digital marketing techniques help you measure campaign performance, analyze customer and loyalty, and identify the satisfaction-driving factors influencing your KPIs. With new data-driven automation and AI, a travel business can create a strategy that helps them thrive in the dynamic business environment of the industry. There’s indeed a great opportunity out there!